departure of Myer’s Richard Umbers while the chairman stays is absurd

IN the ongoing ever-spreading disaster that is Myer, there are two intriguing — on the surface small, but actually very important — puzzles that have gone seemingly unnoticed and certainly unremarked, writes Terry McCrann.

IN the ongoing ever-spreading disaster that is Myer, there are two intriguing — on the surface small, but actually very important — puzzles that have gone seemingly unnoticed and certainly unremarked.

The most immediate is why did former CEO Richard Umbers have to leave the building immediately? We were told only last Wednesday he was being sacked and he was out the door that very day.

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The actual sacking should have been no surprise to anyone. Even, the perennially optimistic Umbers himself.

He had “bet the bank” — his “New Myer Strategy” and his personal position — on Myer “hitting it out of the park” through Christmas-New Year.

But rather than sixes, he and Myer hit zeroes. After the second sales downgrade in the same number of months and the near certainty of a massive loss coming (and probably administration if not receivership), the surprise would have been if he had NOT been sacked.

But why the immediate departure? Somebody was needed to keep steering the good ship Titanic, sorry, Myer, until a new captain could be lured (or shanghaied?) aboard.

After earlier booting the possible heir apparent — deputy CEO Daniel Bracken — in similar precipitous circumstances last July, accompanied by the seemingly obligatory Myer profit downgrade, there was a bit of a gap at the top of the executive ranks.

Former allies Myer chairman Garry Hounsell and sacked chief Richard Umbers.

So when Umbers went, we, or rather Myer and its shareholders, ended up with an accountant, the chairman Garry Hounsell, taking the wheel as “executive chairman”.

That was sorta like the chairman of the White Star line — who was actually on the Titanic on its ill-fated maiden voyage — insisting on taking its wheel after hitting the berg.

Further, Hounsell is someone who has not only made it to his mid-60s with zero experience of retail management — and seemingly proud of it, as he’s publicly intoned his internet retail virginity — but has all-but zero experience of Myer itself. Not only did he only become chairman less than three months ago — it might seem longer because he was making (unwise) hairy-chested statements before that, as chairman-elect — he only actually joined the Myer board two months before that!

Let me summarise. A lifetime accountant who has a somewhat indifferent attitude to retail reality and has been on the Myer board for all of five months thinks he can be such an effective executive chairman that he can dispense with the assistance of its CEO.

You sorta got to think that a person contemplating that course of behaviour, if they had the slightest sense of self awareness, might conclude that it would probably be better for THEM to exit, stage left, with prejudice and urgency, and to leave even a flawed CEO in place.

But that brings us to the second puzzle: why on earth did Hounsell agree to join the Myer board and move immediately to the chair in the first place?

Myer’s immediate trading difficulties were a matter of public record. It had just announced a shock profit downgrade and sacked its deputy CEO — who was also not only the group’s chief merchandise and customer officer, but with Umbers, one of the “New Myer strategy”.

As well, the existential threat to a sprawling bricks-and-mortar department store group like Myer posed by the internet was blindingly, threateningly obvious. Oh, sorry: Hounsell says he doesn’t know about that sort of thing.

Further, Solomon Lew was sitting on the Myer register as the biggest shareholder: a shareholder who was both, pardon the term, pissed off and opportunistic.

I wonder whether Hounsell had ever read the business pages (even of The Age) — oh, I don’t know, any time in the past 15 or so years — and noticed what a minority shareholder named Lew did as a “pissed off and opportunistic” shareholder in another retailer called Country Road?

Obviously not: as he was prepared to first walk into the boardroom of an existentially challenged retailer with Lew on its case, with the specific, agreed, objective of taking the chair.

Again, sorta like that White Star chairman demanding to go ON TO the Titanic AFTER it hit the berg and with prior agreement to then take the wheel!

Hmm. I wonder what it says about Hounsell’s judgment? Hmm. I wonder what it says about the judgment of Myer shareholders prepared to back him against Lew?

Or to back him even just to find a new CEO?

The only “hero CEO” out there is former David Jones CEO Mark McInnes, who sits at Lew’s right hand in Premier. Lew’s masterstroke will be to offer him to Myer for, say, two years.

It is NOT former Myer CEO (and large shareholder: at least in number if no longer in dollars) Bernie Brookes. It is also not McInness’s successor at DJs, Paul Zahra.

But more broadly, with this history — and Myer’s increasingly likely “future” — there is no way a rational Myer shareholder could trust the current chairman and the current board to pick even a terminal CEO.

Premier investments chief Mark McInnes and chairman Solomon Lew.

The investment manager who wields the second-biggest shareholding, Anton Tagliaferro of Investors Mutual, has to step up and make it crystal, publicly clear that he supports Lew’s push to replace the entire board and replace it immediately,

It might be unpalatable and yes Lew has conflicts as a major supplier that have to be managed. Although, think about it: it doubles the skin he has in the Myer game and in working towards its survival.

He would not only lose the $100 million Premier invested in Myer if it went belly-up; he would also lose his lucrative supply contracts.

Any future Myer has is tenuous and uncertain at best. But the future can only start with Hounsell exiting the building immediately and Lew — and McInnes — coming in.